More than 100,000 British companies, with a combined £58bn of debts, are experiencing financial distress, said insolvency group Begbies Traynor. And, according to its Red Flag Alert report, around 50,000 companies are likely to be hit by the government's cuts that will be announced next week, the group added.

"We believe that there will be a prolonged period of growth in business distress, as SMEs feel the full impact of the gradual unwinding of government support measures combined with public sector spending cuts and deteriorating business and consumer confidence," Begbies said in the report.

Construction, IT, recruitment, advertising and business services are some of the sectors most vulnerable to the cuts, the report argued. "With confidence in the construction sector falling to an 18-month low, recruitment activity at its slowest for almost a year and a strong increase in distress in the advertising sector, there is a growing risk that even if the wider UK avoids a double-dip recession, public-sector dependent industries face higher levels of financial distress," said executive chairman Ric Traynor.

Industries such as retail, leisure and travel are also expected to experience a slowdown in their recovery.

The so-called "zombie" companies that have survived the recession thanks to the support of state-owned creditor banks, such as Lloyds or RBS, or private equity firms that do not wish to book a loss, may find less support from now on. "There is some early evidence that creditors such as HMRC are adopting a harder line in collecting debts," Begbies Traynor added.

HMRC wind-up petitions rose by 39% between August and September, as the government is "getting tougher" on chasing tax revenue.